CXC Global reports it knows of one recruitment firm that advised clients to reclassify temporary workers as “unsupervised,” but such a move can put the end-client and the recruitment agency’s directors in jeopardy.

CXC Global cited measures introduced earlier this month by Chancellor George Osborne to tighten rules on how contractors and temporary workers can claim tax relief on travel and subsistence expenses. “According to the legislation, any self-employed professional who doesn’t require the ‘supervision, direction of control’ of their employer can claim these tax breaks, while all other workers cannot,” according to CXC Global. “A presentation leaked by the Unite union has found that one recruitment firm has advised its clients to reclassify temporary staff as ‘unsupervised’ in an effort to avoid the clampdown on the loophole.”

The leaked presentation was reported in The Guardian last week showing how 1st Step Solutions, a specialist in supplying self-employed workers in the construction and rail sectors, had advised clients on changes they can make in some instances to escape the Chancellor’s clampdown.

“It’s simply wrong to advise businesses and professionals not to operate under [supervision, direction or control]”, Michelle Reilly, managing director of CXC Global EMEA said. “The classification is down to HMRC’s interpretation and advising firms in this way is incredibly risky, particularly when they and their board of directors can be held personally liable”.

Reilly continued: “After all, nothing ruins a business relationship like a huge fine for the wrongdoing of one of your suppliers. However, the government must also take some of the blame for agencies adopting this approach. While they’re clear about putting in place overly restrictive rules for the contractor workforce, they’re certainly not clear about how to test for [supervision, direction or control], which leads to situations like this where agencies are essentially making up their own rules. Let’s be clear — this particular agency is in the wrong, but the government also has a part to play.”

CXC global provides contingent workforce management, contractor payroll, recruitment process outsourcing and other services.